2012 (7) TMI 991 - AT - Income Tax

Assessment of loss - Held that - In the absence of any material to show that the assessee has filed any such supporting material before the A.O. or such material was examined by the A.O. during the course of assessment proceeding or the ld. CIT(A) has called for the remand report from the A.O. on the impugned issue, we are of the view that in the interest of justice the matter should go back to the file of the A.O. and accordingly we set aside the orders passed by the Revenue Authorities on this account and send back the matter to the file of the A.O. to decide the same afresh

Summary

Issues involved: Appeal against order of CIT(A) regarding provision for stock obsolescence written back.

Analysis:
1. Background: The appellant, a private limited company engaged in recorded music business, filed an appeal against the order of the ld. CIT(A) for the assessment year 2005-06.

2. Claim: The appellant claimed a deduction of provision for stock obsolescence written back amounting to Rs. 1,13,91,166/-, contending that it was already disallowed in preceding assessment years and should not be taxed again.

3. Appellant's Submission: The appellant, during the hearing, reiterated the submissions made before the ld. CIT(A). They explained that the provision for stock obsolescence was written back as it was no longer required, and the claim had been disallowed and added back by the previous entity from which the business was acquired.

4. Revenue's Argument: The ld. D.R. supported the orders of the A.O. and the ld. CIT(A), suggesting that the matter should be sent back to the A.O. for a fresh decision since it was not considered initially.

5. Tribunal's Decision: The Tribunal noted that the A.O. had denied the claim without proper consideration or a speaking order. While the appellant had submitted detailed supporting documents, the ld. CIT(A) rejected the claim citing lack of relevant information. As no evidence showed that the A.O. had examined the material during assessment or that a remand report was sought, the Tribunal decided to send the matter back to the A.O. for a fresh decision, ensuring a fair opportunity for the appellant to be heard.

6. Conclusion: The Tribunal partly allowed the appellant's appeal for statistical purposes, setting aside the previous orders and remanding the issue back to the A.O. for a fresh decision in accordance with the law. The appellant's claim regarding the provision for stock obsolescence written back was to be reconsidered with a reasonable opportunity for the appellant to present their case.

7. Result: The assessee's appeal was partly allowed for statistical purposes, and the order was pronounced on 18-7-2012.